ALISON COLLIER: Venture capital likely to rebound in SA and rest of Africa in 2025

After two challenging years for global venture capital (VC) there are clear signs that 2025 may mark a turning point for SA and the African continent. While we should not expect a return to the exuberance of 2021, the market is showing early signs of resilience and recovery.

The turbulence of recent years has sharpened the focus on quality — on disciplined capital use, strong unit economics and scalable business models. These traits will define the winners in Africa’s next chapter of innovation-led growth.

We have spent the past year closely tracking the evolution of the investment climate. After a dramatic 46% drop in African VC funding in 2023, 2024 showed signs of stabilisation. According to internal valuation memos from Endeavor’s Harvest Fund II, equity funding across the continent declined by just 2% year on year in 2024, to $2bn. While that number is far from historic highs, it strongly suggests that the bottom may be behind us.

Encouragingly, the fourth quarter of 2024 was particularly robust. Three megadeals — TymeBank ($250m), Zepz ($267m), and Moniepoint ($110m) — collectively accounted for nearly half of all funding raised on the continent. These nine-figure rounds were not just anomalies; they signalled a cautious return of investor confidence in high-quality, late-stage African ventures.

In SA the story was one of relative resilience. Total venture funding reached $459m in 2024. Though still below pre-2022 levels, SA avoided the sharp volatility seen in other markets. Much of this stability can be attributed to macroeconomic tailwinds. Inflation has moderated, energy availability has improved, and the peaceful conclusion of national elections has strengthened investor sentiment. TymeBank’s record-setting round further underscored the global appetite for bankable, scalable SA fintech.

In the rest of 2025 we expect the market to continue its slow, steady rebound. Globally, inflation is easing and interest rates are expected to trend downward. These shifts should unlock capital that has been sitting on the sidelines. However, unlike in 2021 investors are now more selective, strategic, and more focused on fundamentals.

Africa still awaits its AI boom, which was a key driver of venture capital flows globally in 2024. But the continent is undoubtedly ripe for a new wave of digital innovation. The core ingredients are in place: a young, entrepreneurial population; high rates of mobile penetration; and increasing demand for digital financial, health and enterprise services.

However, not all capital is created equal. Investors are increasingly seeking partners who offer not just funds but also strategic value and rigorous vetting. And challenges remain. Global capital markets are still recovering. Political and regulatory risks must be carefully managed. And founders will need to remain vigilant — extending runway, prioritising breakeven and being judicious in their fundraising strategies.

Yet the long-term fundamentals of African innovation remain undeniable. We are witnessing a generational rise in digital adoption, financial inclusion and youth-driven entrepreneurship. These bottom-up forces are reshaping markets and unlocking new opportunities for growth.

What we need now is patient capital and purpose-driven partnerships to sustain this momentum. The investors and institutions that understand Africa’s unique dynamics and are willing to invest in real businesses solving real problems, will be the ones who help shape, and benefit from, the continent’s next growth wave.

We remain deeply committed to supporting these entrepreneurs. By providing access to capital, markets and mentorship, we aim to help them navigate a complex environment while building the transformative companies of the future. The recovery may be measured, but the opportunity is immense.

• Collier is CEO of Endeavor SA.